BOE to build 5.5-generation AM-OLED production line

Recently, BOE signed the "5.5th Generation Active Matrix Organic Light Emitting Diode Display (AM-OLED) Production Line and Energy Construction Project Investment Framework Agreement" with the Ordos City Government of Inner Mongolia Autonomous Region and Haohua Energy, and plans to invest 22 billion yuan in the construction of Ordos, Inner Mongolia 5.5 generation AM-OLED production line.

This is a huge investment decision made by BOE in the small size transformation of the 5th generation line in Beijing, the rapid climbing of the 6th-generation line in Hefei, the construction and operation of the 8th-generation line in Beijing, and the continuous increase in investment in products and processes.

This year, the LCD panel market was oversupply, resulting in a collective loss of global panel makers. BOE is no exception. The 2011 mid-year report showed that BOE suffered a loss of 1.2 billion yuan in the first half of this year, and it is expected that the amount of losses in the third quarter will reach as much as 2.1 billion to -23 billion yuan.

In this context, the company invested heavily in the construction of a 5.5-generation AM-OLED production line. BOE's approach triggered market discussions. In this regard, BOE Vice President and spokesperson Zhang Yu said that because of the foundation of the TFT-LED industry in China, there is a certain technical reserve in OLED, so optimistic about the future of the OLED market. "It is necessary for BOE to seize the future technical commanding heights," he said.

According to BOE's forecast, the average annual income tax profit of the AM-OLED project during the calculation period is 2.89 billion yuan, the average sales profit rate is 18.5%, and the after-tax dynamic investment recovery period is 8.76 years. BOE said that after the implementation of the project, the company's financial operations are normal, can bring higher profits for the company, can repay loans in time and recover investment during the calculation period, have a certain ability to resist risks.

However, after the huge investment in the AM-OLED project was revealed, the stock price of BOE went down all the way, indicating that investors have insufficient confidence.